Financial Intermediation Spread and Financial Growth in Nigeria

Abstract

This study examined financial intermediation spread and financial growth in Nigeria from 1991 to 2024. The objectives were to find out the relationship interest rate spread, lending rate and deposit rates have on growth of loans in Nigeria. Expost facto design was adopted. Data were collected from CBN statistical bulletin from 1991 to 2024. Analysis were carroed out using Ordinary Least Square method, Augmented Dickey Fuller, Johansen Co integration, Error correction model were employed. Findings in this study have shown that interest rate spread has no predictive influence on growth of loans in Nigeria. In fact, it negatively affected financial growth suggesting that a higher interest rate spread reduces the ability to create more credit facilities. In addition, deposit rate showed a negative and insignificant influence on financial growth while lending rate showed a positive and significant impact on financial growth. It made policy recommendation that will enhance the impact of interest rate spread on financial growth.